Trian says institutional investors express support for candidates at Disney

The Trian Group, which beneficially owns over $3.5B of common stock in The Walt Disney Company, announced that two respected institutional investors, the California Public Employees’ Retirement System and Neuberger Berman, a global asset manager, have expressed their support for both of Trian’s nominees, Nelson Peltz and Jay Rasulo, in connection with Disney’s annual meeting, which is scheduled to be held this Wednesday, April 3, 2024. Both CalPERS and Neuberger Berman recognize Disney’s poor track record of corporate governance – which includes a persistent and significant lack of alignment between pay and performance and a failure to appropriately manage CEO succession – noting that the Disney Board would benefit from “a fresh perspective” and “(t)wo new directors who are qualified and capable of leading needed change…” In supporting the election of Nelson Peltz and Jay Rasulo, CalPERS noted the following: “CalPERS believes Walt Disney Co will benefit from fresh eyes on its board of directors and voted its company shares in favor of candidates Nelson Peltz and Jay Rasulo…(CalPERS’) established voting guidelines focus on the need for independent corporate boards, a say in setting executive pay, and increased transparency. Two new directors who are qualified and capable of leading needed change in corporate governance will serve the Disney board well.” Similarly, Neuberger Berman wrote that: “We believe there is opportunity to strengthen relevant policies and practices and that the board may benefit from the addition of a fresh perspective and more independence. For these reasons, we intend to support the election of dissident Trian nominees Nelson Peltz and James Rasulo to the board….(W)e believe (Trian’s) nominees are very strong candidates given Peltz’s large ownership of the company and extensive board experience and Rasulo’s long-term experience while working as an executive at Disney…W)e do not believe short-term TSR performance alone is an adequate indicator of the quality of governance at a company. Despite recent improvements, in our opinion, the deficiencies of the board that ultimately led to the failed 2020 succession endeavor and related consequences remain. As such, we are unconvinced of the current board’s ability to uphold good governance practices and fulfill one of its core responsibilities in finding a CEO successor…(W)e have concerns regarding the Disney board’s multi-year efforts to name a successor to CEO Bob Iger…The board has admitted to not adhering to and executing the process it had in place for Disney’s 2020 succession plan and that Chapek’s appointment was a strategic misstep…(W)e believe these succession planning challenges have impacted business continuity and distracted from business performance.